Yahoo's growth anemic as turnaround chugs along

SAN FRANCISCO Wed Apr 16, 2014 4:24am IST

A Yahoo logo is pictured in front of a building in Rolle, 30 km (19 miles) east of Geneva, in this file picture taken December 12, 2012.  REUTERS/Denis Balibouse/Files

A Yahoo logo is pictured in front of a building in Rolle, 30 km (19 miles) east of Geneva, in this file picture taken December 12, 2012.

Credit: Reuters/Denis Balibouse/Files

Related Topics

Stocks

   

SAN FRANCISCO (Reuters) - Yahoo Inc barely managed to expand its core advertising business in the first quarter despite Chief Executive Marissa Mayer's two-year effort to revive growth at the Internet pioneer.

Mayer told analysts on a Tuesday conference call she believed the company had been through the worst and had now entered a period of stable but modest growth.

Yahoo expects second quarter revenue, excluding traffic acquisition costs, of $1.06 billion to $1.1 billion, in line with Wall Street's expectations for about $1.08 billion.

Still, Yahoo's shares leaped 8 percent on strong results from Alibaba Group Holding Ltd, the Chinese e-commerce company in which it owns a 24 percent stake, ahead of its highly anticipated initial public offering.

Mayer is trying to revitalize Yahoo's business. The former Google Inc executive revamped many of Yahoo's Web products but its ad sales business continues to struggle, while rivals such as Google, Facebook Inc and Twitter Inc post strong revenue growth.

Revenue from display ads, which account for roughly 40 percent of Yahoo's overall sales, increased just 2 percent year-on-year to $453 million, excluding partner fees. That meager growth follows several consecutive quarters of decline in the display ad business.

Shares of Yahoo were up at $36.90 in after hours trading.

"It's really Alibaba driving things," said Macquarie Research analyst Ben Schachter. Yahoo's core business improved slightly in the first quarter, but "really the story here is Alibaba and the somewhat unexpected re-acceleration" of its revenue growth.

The Chinese company's revenue increased 66 percent to $3.06 billion in the fourth quarter, according to slides that Yahoo posted on its investor relations website on Tuesday, faster than the 51 percent growth in Alibaba’s third quarter.

Yahoo reports the Chinese company's financial results one quarter later than its own. Alibaba, valued at more than $140 billion, is expected to go public later this year in the United States in the largest IPO since Facebook Inc's debut in 2012.

Yahoo's revenue, excluding fees paid to partner websites, came to $1.087 billion in the first quarter, up from $1.074 billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S had expected adjusted revenue of $1.077 billion. It had net income of $311.6 million, or 29 cents a share, in the first quarter. It earned 38 cents a share excluding certain items.

(Reporting by Alexei Oreskovic; Editing by Alden Bentley and Richard Chang)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Reuters Showcase

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

Apple-1 Auction

Apple-1 Auction

Early Apple computer sells for $905,000 at auction.  Full Article 

No More Nokia

No More Nokia

Microsoft looks set to drop Nokia name from smartphones.  Full Article 

User Data Security

User Data Security

Apple CEO discusses security with top Chinese official amid hacking claims - Xinhua.  Full Article 

Patent Wars

Patent Wars

Big Tech winning battle with 'patent trolls'.  Full Article 

Record Season

Record Season

FedEx expects record peak volume of 22.6 million packages on Dec. 15.  Full Article 

Yahoo Earnings

Yahoo Earnings

Yahoo ekes out Q3 revenue gain despite display ad weakness.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage